McDermott Profit Dips; Plans Units Sale; Lowers Guidance
Houston-based McDermott has reported quarterly profit of $2 million, or $0.1 per diluted share, compared to $95 million, or $1 per diluted share in the third quarter of 2017.
Adjusted net income for the third quarter 2018 was $89 million, with adjusted diluted earnings of 20 cents per share.
According to McDermott, the Q3 result was largely offset by $103 million of costs related to intangibles amortization, Combination Profitability Initiative and transaction costs associated with combination with CB&I. Net income in the quarter was also unfavorably impacted by higher than expected tax expense, the company said.
The company generated Q3 2018 revenues of $2.3 billion, an increase of close to 140% compared to revenues of $960 million for the prior-year Q3.
The key projects driving quarterly revenues were downstream projects in North, Central and South America (NCSA) and offshore projects in the Middle East and North Africa (MENA).
For the first nine months of 2018 the company booked profit of $84 million on revenue of $4.6 billion, against profit of $153 million on revenue of $2.3 billion.
Mcdermott reported revenue pipeline comprised of $11.5-billion backlog, bids and change orders outstanding of $21 billion and target projects of $48 billion.
For the second half of 2018, McDermott said it expects revenue of up to $5.1 billion, with net loss between $10 – $20 million, changing from Q2 2018 guidance of profit between $60 – $70 million.
The company has also revealed plans to divest its storage tank business and U.S. pipe fabrication business.
“We have completed a strategic review of our business portfolio and have determined that the tank storage business and the U.S. pipe fabrication business are not core to our vertical integration. As such, we have developed plans to seek buyers for each of the two businesses, which together had 2017 revenues of approximately $1.5 billion.
“We anticipate receiving proceeds in excess of $1 billion upon the sale of those assets and expect to use a majority of the proceeds to reduce debt under our term loan,” said David Dickson, president and CEO of McDermott.
Subsea World News Staff